Investing in Japan

A look at Japanese stock valuations

admin — Mon, 01 Jun 2009 02:03:28 +0000

The Nikkei, like many other benchmark indices, is hardly the volatile, motion sickness inducing headline producer that it was of months past. But no matter how hard I’ve tried, I just haven’t been able to turn myself into a green shoots market cheerleader. Nevertheless, I may be willing to concede that downside risk (in terms [...]

Japan lost, but not dead, in deflation

admin — Sun, 26 Apr 2009 23:56:31 +0000

For Japan, the 1990s are commonly referred to as the “lost decade.” Those that know me are aware that I look beyond that and actually regard a quarter-century as the appropriate “lost” duration. However, if one really thinks about what has transpired and where we are today, it is rather impressive that Japan continues to [...]

Pricey Japanese stocks?

admin — Mon, 13 Apr 2009 00:00:19 +0000

Pricey, and Japanese stocks, are typically not heard together in the same sentence. However, since last September’s market rout, earnings have deteriorated to the point that the Nikkei 225 is trading at over 175x forward earnings; 10.1x on a trailing basis. No doubt the ratio will swell some more, potentially going negative for a quarter, [...]

Nikkei 9000, 8000, or 7000?

admin — Tue, 31 Mar 2009 23:48:37 +0000

About a year ago today, I published a weekly Nikkei outlook discussing whether the Nikkei was headed to 13,000 or back to 12,000. Suffice to say that much has happened since then. At the start of the new fiscal year today, the range in question is broader, 7,000 - 9,000, but obviously it is not [...]

Japan inadvertently intervenes to soften yen

admin — Thu, 05 Mar 2009 19:07:03 +0000

The Japanese yen (JPY) is still “relatively” strong, but it has weakened by a pretty significant amount against the US$, nearly 10 points, in recent weeks. With much buzz of yen intervention leading up to the recent softness, one would have thought the MoF ran out of patience and intervened. Well, in fact, it kind [...]

Thoughts on Nakagawa and on investing in Japan

admin — Tue, 17 Feb 2009 18:00:52 +0000

Former Japanese Finance Minister Nakagawa should never have been at the press conference that did in his career, and now has the Japanese press gone mad discussing “reputation risk.” It is disturbing that he was even allowed near the table. Equally troubling is how BoJ Governor Shirakawa didn’t preempt some questions, especially the one’s directed [...]

Japanese stocks ‘fairly’ undervalued

admin — Fri, 23 Jan 2009 05:17:29 +0000

The author’s intent is not to be misleading, but rather to be as frank as possible, regarding the longstanding debate of whether or not Japanese stocks are truly undervalued. In short, the answer is no. I no longer believe Japanese stocks are undervalued, not to the extent that I once did, and not to the [...]

UPDATE: Borderless Conventional Banking Failure

admin — Thu, 22 Jan 2009 15:29:43 +0000

No surprise that the BoJ kept rates unchanged at 0.1%. That a return to deflation is expected comes as no surprise either, since in reality, deflation never really ended, even when commodities surged last year. Meanwhile, the Japanese are left in the same predicament, with next-to-zero returns on deposits and no real need or [...]

Bank of Japan caves in again

admin — Fri, 19 Dec 2008 15:44:55 +0000

I don’t agree with the BoJ’s decision to cut from 0.3% –> 0.1%. The cost of borrowing is not the problem here. In fact, the impetus to cut was at least partially pressure from the MoF, in what amounts to a silly attempt to ease yen-strength. The reaction has been muted, and for now, [...]

Recession confirmed in Japan — tell us something we don’t know

admin — Mon, 17 Nov 2008 11:29:20 +0000

No need to get excited over the fact that the Japanese economy has now contracted two consecutive quarters (no shooting the messenger). That was largely already factored into equities, thus explaining the severely depressed levels registered of late. However, as The Economist reported in its latest edition, the “Toyota shock” of a sharp decline in [...]